University of Michigan Legal Working Paper Series
University of Michigan John M. Olin Center for Law & Economics Working Paper Series
What Do Nonprofits Maximize? Hospital Service Provision and Market Ownership Mix
Abstract
Conflicting theories of the nonprofit firm have existed for several decades yet empirical research has not resolved these debates, partly because the theories are not easily testable but also because empirical research generally considers organizations in isolation rather than in markets. Here we examine three types of hospitals – nonprofit, for-profit, and government – and their spillover effects. We look at the effect of for-profit ownership share within markets in two ways, on the provision of medical services and on operating margins at the three types of hospitals. We find that nonprofit hospitals’ medical service provision systematically varies by market mix. We find no significant effect of for-profit market share on the operating margins of nonprofit hospitals. These results fit best with theories in which hospitals maximize their own output.
Subject Area
Health Law and Policy
Recommended Citation
Jill Horwitz and Austin Nichols,
"What Do Nonprofits Maximize? Hospital Service Provision and Market Ownership Mix"
(July 2007).
University of Michigan Legal Working Paper Series.
University of Michigan John M. Olin Center for Law & Economics Working Paper Series.
Working Paper 72.
http://law.bepress.com/umichlwps/olin/art72
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